Category Watch: Snacks Eating experience, nutrients, portability and innovative solutions will drive growth
Category Management
Lighting up the path to purchase by creating the right in-store environment for shoppers
Technology
How IoT adds value to manufacturing and field mobility in the food industry
Page 30 Page 56Page 48
INDIA EDITIONINDIA EDITIONApril 2017 Volume 11 Number 4 • Rs 100 • www.indiaretailing.com
Page 20
FRONT-RUNNER
IN PER SQ. FT. SALES
– Samir ModiPresident, 24 SEVEN
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6 | Progressive Grocer | Ahead of What’s Next | April 2017
April 2017 • Volume 11 • Number 4 • Pages 62 Editor’s Note
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Th e linear journey of shoppers through the aisles of supermarkets is fast changing. Customers are now presented with myriad retail choices. Th ey have the luxury of choosing one of the several channels available to them, depending on their convenience and mood. In addition, at any given time, there are other factors at play as well that play a role in coaxing shoppers to stores: their sense of comfort, urgency to purchase, paucity of time, ease of travel, or the desire for some shoppertainment.
Not surprising then that the bemused grocer is trying to gauge his customer’s next move. Looking at the current phase of retail industry evolution, grocers have no choice but to off er both offl ine and online touch points if he wishes to remain competitive. Th e focus now is to build and grow the grocery business from a customer-centric perspective. Th is entails serving customers through multiple channels: Internet, telephone, home delivery, mobile vans, catalogues, kiosks, etc.
Today, more than ever before, the customer is dictating the route he/she wants to do business in, and grocers are quickly adapting. Th ey are putting in place systems and processes that can facilitate the customer’s shopping experience. By using a combination of online and offl ine channels, they are able to leverage the unique benefi ts of each channel to attract and satisfy their customers.
Th e growth of alternate retail channels is also compelling brands and retailers to devise their marketing strategies around these retail formats in addition to the conventional brick and mortar retail channels. Over the next few years, it is expected that intensifying competition will drive grocers to innovate further in order to remain closer to their customers.Rakesh Gambhir, Convenor, India Food Forum
[email protected]: +91 9910001375
Lokesh Arora, Vice [email protected]: +91 9999033612
Business Head
DELHI Ekta Roy, Sr. Manager
MUMBAI Waseem Ahmad, Vice President & Branch Head
BENGALURU Suvir Jaggi, Vice President & Branch Head Ashraf Alom, Dy. Manager
KOLKATA Piyali Oberoi, Vice President & Branch Head
Membership Team: Priti Kapil Sarika GautamPriyanka Sagar
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8 | Progressive Grocer | Ahead of What’s Next | April 2017
CONTENTSApril 2017, Volume 11, Issue 4
IN EVERY ISSUE
59 WHAT’S NEXT
New products on the shelves60 COLUMN
44 FRESH FOOD A brand idea
48 CATEGORY MANAGEMENT Lighting up the path to
purchase
50 NONFOODS Measures of success
52 CATEGORY LEADERS Th e trade pundits
56 TECHNOLOGY IoT: Force multiplier
58 OPINION Making modern trade thrive
Cover Story
20 Th e front-runner in per square feet retail sales
Samir ModiPresident, 24 SEVEN
10 BEVERAGE Riding the health and
nutrition bandwagon
12 RETAIL TECH Trends and practices in omni-
channel retail
14 TRENDS Food for tomorrow - the
growth areas for brands
18 GROCERY Mixing it Up
26 SPICES Innovation in creating unique
blend masala mix
28 FRESH FOOD Filling up on fresh
30 CATEGORY WATCH: SNACKS Holly jolly noshing and
munching
42 E-COMMERCE How to make sure your business
boom
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Cover Story
The front-runner in per square feet retail sales
With the demand for a round-the-clock convenience store showing eff ervescence – be it for emergency shopping, a hop-in buying, or for impulse purchases – in urban
metropolises, 24 SEVEN is gearing up to open 400 new stores in Delhi-NCR over the next two years. “We have the concept, the brand visibility, and our value proposition is crafted to create an International shopping experience with the convenience of round-the-clock availability of all needs and a unique mix of reasonably priced products in a shopping environment that prioritizes quality and hygiene,” avers Modi.
Samir Modi, President, 24 SEVEN Convenience Stores, is a buoyant retailer with fresh wind in his sails. After a sedate couple of years spent fine-tuning and tweaking his retail business, he is now limbering up and set to move the needle further in the convenience store format. The recently opened 47th outlet of 24 SEVEN in tony GK II, M-Block market, Delhi, embodies the chain’s business philosophy of acting as a retail leader in the vanguard of latest technology adoption. “We have pushed the retail envelope further by launching a more cutting edge convenience store, which is a reflection of the world-class stores that we wish to create for the well-travelled Indian consumer,” said Modi, during an interaction with Sanjay Kumar of Progressive Grocer.
Samir ModiPresident, 24 SEVEN
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April 2017 | Ahead of What’s Next | Progressive Grocer | 21
Cover Story
came with a modern look and ambience in terms of design, shop fi t outs and equipment. In 2012, we got the platform ready for the fi rst set of expansion of this profi table “convenience store” model and opened 45 stores in a span of two years.
Th is year, we have pushed the envelope further by launching a more cutting edge convenience store. Last month, we launched the new and improved cutting edge 24 SEVEN store at GK II, Delhi. Th e store embodies our business philosophy of acting as a front runner and an early adopter of the latest technology in use world-wide. Th e new store at GK II is a refl ection of the world class stores that we wish to create for the well-travelled Indian consumer. Th e response to the new store has been overwhelming but it will not make us complacent in trying out even more innovation in terms of technology in the near future.
In your view, what do you consider the pros and con of your format over the others? a) Pros• Open 24 hrs, 365 days• Fulfi llment of all daily needs from dusk to dawn• Assurance of quality & freshness• Quick check outs• Unique assortment
b) Cons• Space is a constraint therefore limiting depth
(choices) in categories • No space to stock products. As space is limited,
the focus is on off ering fresh products to customers
• High warehousing & delivery cost
What is the location strategy for your stores?We follow our customers and the demand for a round-the-clock convenience store can be seen almost everywhere today. We adopt and choose the locations in high footfall areas or busy markets. Our shops are conveniently located on the ground fl oor with a clean and large façade. Our customer must
We stock complementing products together for the ease of consumers and follow “Tanpin Kanri” to replace slow movers with more sought after products regularly.
You have just launched a new store after quite some time. How would you assess the performance of your stores till date?Th e world over, the retail landscape is gradually moving away from the large departmental stores and supermarkets toward smaller stores located at every nook & corner. Globally, these stores are also known as the “Convenience Stores” and the core identity of such stores draws on three basic elements. First is their proximity (walking distance) to the catchment; Second is the fact that they are open round the clock; and the third and most important element is their unique product assortment, which essentially takes care of all “dusk to dawn needs” (all those products one needs from the time they wake up in the morning to the time they go to bed).
In India too we have stores that fi t this description more or less. Th ey are better known as “kirana” (mom n pop stores) shops, which are in abundance. But the format is under-developed and unorganized even though kirana shops off er great convenience.
Th is void was being felt over a long time and the gap was accentuated as consumers’ spending power increased and their needs began to grow even as the time on their hands to tend to the growing needs began to shrink. Other factors also came into play: A rapid increase in International exposure brought about by frequent travels and the pervasiveness of media; changing lifestyle & purchasing habits. Th e combined impact of all these factors created a huge demand for a “convenience store” model. By 2005, the market appeared ripe and tailor-made for this format, which is when 24 SEVEN Convenience Stores were launched and have ever since pioneered this concept.
Our business model was designed around the winds of change to begin with. So we launched and tested four stores in the fi rst year. Over the next few years the model was tweaked to get the product assortment, services, look & feel of the stores in line with the international standards back then. To off er an international shopping experience, our stores
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30 | Progressive Grocer | Ahead of What’s Next | April 2017
Category Watch Snacks
Snacks are among the fastest and most convenient forms of consumption. Not surprising then that snacks are replacing many traditional meal occasions. With most snack categories experiencing strong sales growth in recent years, the outlook for the category is going to be strong. Analysts predict that long-term growth in snacks will be due in large part to greater experiences, a growing grasp of whole-ingredient nutrition, portability and miniaturization of solutions.
Holly Jolly Noshing and munching
By Premjit Mohapatra
30 | Progressive Grocer | Ahead of What’s Next | April 2017
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April 2017 | Ahead of What’s Next | Progressive Grocer | 31
Category WatchSnacks
During 2011-15, the retail snack food category grew at an annual rate of 20.5% by value and 12.3% by volume and the category is projected to grow at an annual rate of 18.0% by value and 13.3% by volume in the 2016-20 period.
— Ranjana Sundaresan Senior Research Analyst,
Mintel
Today, more than ever before, eating occasions are now overwhelmingly linked with snacks. Be it ready-to-eat popcorn, veggie chips or nuts, snack items considered better-for-
you options are driving sales growth in snack food categories. Analysts attribute this trend to the rise in urban population, increasing per capita income, busier lifestyles, higher disposable income and need a need for convenience arising out of the fast-paced lifestyles and a growing cultural tradition of snacking between meals. Over the past two decades, snacks have found high acceptance across large and small cities to become the preferred choice for consumers. According to Ranjana Sundaresan, Senior Research Analyst, Mintel, “During 2011-15, the retail snack food category grew at an annual rate of 20.5% by value and 12.3% by volume and the category is projected to grow at an annual rate of 18.0% by value and 13.3% by volume in the 2016-20 period.”
According to research commissioned by Mintel, snacking is pretty much an established trend for Indian consumers. About 75% of adults aged 18-64 said they snacked at least once a day. Among younger adults – those in the 18-34 age group – 77% said they snacked once a day. Th is dropped slightly to 73% for adults aged 35-64 years. According to Mintel’s data, India’s organized snack market was worth INR 197.8 billion in 2015 and it should only continue to grow as India is one of the fastest growing economies in the world. According to Mintel, the major product segments within retail packaged snacks category includes:• Chips, which includes primarily potato chips • Snack Nuts, which includes packaged nuts
intended for immediate consumption• Other Snacks, which includes potato-based
snacks, rice-based snacks, corn-based snacks, popcorn, fruit snacks/jellies among others. Other Snacks also covers a large variety of branded and packaged traditional snacks, including but not limited to mixture, chiwda and banana chips.
As per Mintel’s Global New Products Database (GNPD), Other Snacks, which is the largest segment, accounted for 70% by volume and 61% by value of the retail snacks market in 2015. Chips followed, accounting for 34% by value and 27% by volume. Snack nuts accounted for 4% of volume sales and 6% of value sales. Th is segment saw the highest volume of growth between 2014 and 2015, at 22%. In 2016, in terms of new products, nuts led the overall snack category with 21% of launches.
With the entry of major players like PepsiCo India Holdings Pvt Ltd, ITC Ltd, and Balaji Wafers Pvt Ltd in the snacks category, salty snacks have grown tremendously over the past decade. Th e introduction of brands such as Lay’s, Uncle Chipps, Bingo! and
Balaji within potato chips and brands such as Kurkure, Cheetos, and Bingo! within puff ed snacks have proved to be a huge hit among consumers. According to market researcher, Euromonitor International, salty snacks is the largest selling snack product in terms of retail value sales with a contribution of 55%-58% of total value sales within snacks in India. It is also the largest in terms of volume share. About four years ago, packaged namkeen had replaced Western snacks such as potato chips and fi nger sticks as the largest segment within branded salty snacks market. According to Manoj Gupta, Executive Director, AFP Manufacturing Co. Pvt. Ltd, “In the last four years, Indian namkeens have grown at faster pace @ 24-25% as compared to Western snacks @ 12% overall.” AFP, which has over two decades of experience in manufacturing snacks ranging from moong dal, namkeen mixture, aloo bhujia, sweets, bakery, kaju mixture and extruded snacks, is also one of the leading players in the Private Label category that has served some of the top snack players like Lehar Namkeens, Bharti Walmart and others.
Demand AcceleratorsInnovative products & variants: Th e Indian snack market has always been known to surprise and delight
Major snack categories in India and their sales growth
Sub-Category 2013 2014 2015 2016 Total Sample
Nuts 18.13% 18.56% 20.55% 21.38% 19.50%
Wheat & Other Grain-
Based Snacks12.96% 12.78% 11.94% 11.05% 12.27%
Snack Mixes 11.67% 12.59% 11.05% 11.30% 11.72%
Bean-Based Snacks 11.67% 11.78% 11.94% 11.10% 11.64%
Fruit Snacks 9.65% 10.52% 13.06% 13.65% 11.53%
Potato Snacks 8.96% 7.19% 6.55% 7.54% 7.59%
Rice Snacks 8.36% 6.74% 5.38% 5.65% 6.63%
Vegetable Snacks 4.68% 5.89% 5.38% 2.95% 4.83%
Corn-Based Snacks 3.15% 3.89% 4.12% 3.97% 3.76%
Hors d'oeuvres/
Canapes3.39% 4.07% 3.56% 3.56% 3.66%
Total Sample 100.00% 100.00% 100.00% 100.00% 100.00%
Source: Mintel
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44 | Progressive Grocer | Ahead of What’s Next | April 2017
Fresh Food
Eye-catching displays, clever campaigns are making a name in fresh fruits and veggies.
A Brand IdeaBy Jennifer Strailey
“Branded produce has changed the consumer dialogue about fresh fruits and vegetables,” asserts Mary Coppola, senior director, marketing
communications for the Washington, D.C.-based United Fresh Produce Association, who sees brands as a vehicle for helping the consumer diff erentiate between choices in the produce department.
“As real estate in the department becomes more and more valuable due to the addition of new and diff erent SKUs, branding becomes even more critical,” she continues, noting that it builds loyalty and communicates trust, familiarity and consistency.
“Branded produce is quite important today, because trust, safety, quality and reliability are how consumers make their choices, and that’s what brands convey,” affi rms Coppola.
According to “Fresh Facts on Retail,” a report from United Fresh and Nielsen Perishables Group, products such as salad kits and value-added vegetables, both of which are widely branded, continue to drive growth in the produce department. Meanwhile, value-added fruits contribute 5 percent of dollars to total produce.
Sustaining and growing sales of branded produce off er both fresh opportunities and new challenges for supermarkets.
“Th e real challenge is in maintaining that success and capitalizing on it as you introduce new products to the retail space,” says Coppola, who adds that focusing on the messages that resonate most with consumers — fresh, healthy and convenient — is key. “It’s the trifecta for success.”
Fresh Food
Branded produce is quite
important today, because trust, safety, quality and reliability
are how consumers make
their choices, and that’s
what brands convey.
— Mary CoppolaUnited Fresh
Produce Association
Runaway SuccessWhat could be more fresh, healthy and convenient than an apple? Rainier Fruit Co. encapsulates the fruit’s virtues in its new Wholesome to the Core messaging. Th e Selah, Wash.-based company’s latest campaign targets health-conscious consumers in general, and runners in particular.
“According to Running USA, running as a sport has grown by over 300 percent during the last 20 years, and nearly 19 million athletes completed a running event in 2015,” notes Andy Tudor, Rainier’s director of business development. Th e company plans to support this burgeoning community with online promotions and in-market events that celebrate everyday runners.
As part of Rainier’s new focus, it has forged a three-year sponsorship agreement with the Boston Athletic Association to serve as the offi cial apple of the Boston Marathon, an event that attracts some 30,000 participants and 500,000 spectators.
Rainier created a special Boston Marathon box that was featured in supermarkets and club stores, including Whole Foods Market and Costco, throughout the Northeast. Many of the participating retailers, like a Whole Foods store in Portland, Maine, built captivating displays of Rainier’s organic apples using the display-ready marathon boxes.
“Th e iconic blue-and-yellow branding of the Boston Marathon got both retailers and consumers excited, and drew more shoppers into the category — especially at a time of year that apple sales are lagging,” observes Tudor.
Th e Boston Marathon boxes also built brand recognition for Rainier’s organic Lady Alice,
USA_Fresh Food_A Brand Idea.indd 44 4/12/2017 6:15:28 PM
Fresh Food
Honeycrisp and Junami apples. “We have made a large shift toward organic production in apples, pears and blueberries over the last 15 years, making us one of the largest organic fruit producers in the U.S.,” adds Tudor.
While progress has been made in building brand loyalty in the produce department, the industry’s work is far from done. According to Tudor, “Produce has several legacy brands that have been around for a long time, and a few new brands that have recently developed thanks to the power of marketing, but as a rule, consumers aren’t able to name a lot of branded produce.”
Ongoing success depends on suppliers and retailers alike consistently supporting quality, great-tasting products with a strong message position.
Good TimesHolidays and special events provide the perfect opportunity to showcase popular brands in the produce department. Produce managers across the country have particularly shown their display prowess in the avocado category leading up to the Super Bowl.
Prior to Super Bowl 50, the Target website posted an image from its Edina, Minn., store that depicted a bountiful bin of avocados branded with Avocados From Mexico’s Taste the Victory tagline. Above the
COOL RUNNINGSA Whole Foods Market in Portland, Maine, features Rainier apples for the Boston Marathon.
image, the retailer used the following caption: “Th is Week’s Spike in Avocado Sales Can Only Mean One Th ing: It’s Game Time.”
Minneapolis-based Target also touted a short nutritional message and a few of its favorite avocado recipes for game day on its site.
Meanwhile, a Mollie Stone’s Market in Greenbrae, Calif., used the Irvine-based California
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Category Leaders
52 | Progressive Grocer | Ahead of What’s Next | April 2017
Freshness is the most important
component of customer
decision- making in the category and
this is unlikely to change.
— K. Ravindranath
GM, Head – Buying
& Merchandising
(Fruits & Vegetables)
Fresh ideas and freshness will always be the
mantra to win the customer’s heart.
— Pramod Onkarappa
Senior Business
Manager –Fish & Meat,
SPAR Hypermarket
ROLE AND RESPONSIBILITYK. Ravindranath: FnV category is one of the most profi table categories at Heritage Fresh. I was instrumental in establishing and scaling up the Fresh category at 132 plus stores across Hyderabad, Chennai and Bangalore. Th is vertical delivers about 1/5th of our total business at Heritage Fresh.
Delivered one of the best gross margin return on fl oor space and lowest dump and shrink among all organized competitors in supermarket format; Supervised the complete supply chain operations; delivered approximately 60% of the produce by volume sourced directly from farmers/aggregators.
Experience in retail: 12 years of direct association with the industry.
Area of specialisation and excellence: Agribiz, Buying & Merchandising & Retail Marketing.
Most interesting thing about your job: Opportunity to build a successful fresh business in the Indian modern retail context that is instrumental in driving the business/format’s profi tability.
Pramod Onkarappa:• Operating profi table business model• Buying & Merchandising• Ensure high quality standards & hygiene practices• Customer delight
Experience in retail: Coming from a strong sea food industry background and with retail experience of 4.5 years, and overall experience of 16 years.
Most interesting thing about your job: As an everyday business, every transaction is an opportunity.
Area of specialisation and excellence:• Subject matter specialist• Effi cient procurement• SOP development and implementation• Right sourcing• Catering to customer needs• Category expansion & penetration
SOLUTION TO CHALLENGESK. Ravindranath: Finding and retaining talent with an attitude for business in Fresh category; fi nding suppliers who understand our vision for Fresh business and be a part of it.
Pramod Onkarappa:• Need to be more proactive as its not an organized
sector• Less control on external factors like seasons /
natural calamities, etc.• Groomed and trained CSAs as butchers (skilled
unorganized labourers) to overcome attrition
CONTRIBUTION TO THE CATEGORYK. Ravindranath: Unique procurement strategy: Two separate teams (category & IPH) driven by our own and independent PnL to help us buy at the right/lowest price, thus enabling to deliver best margins while keeping our selling prices low.
Farm procurement: Over 70% of all bulk/seasonal SKUs sourced directly.
Best merchandising: 40 per cent plus penetration. Best-in-class range – 120 plus SKUs at top 15 stores. About 90 SKUs in other stores.
Market led pricing strategy: All selling prices are fi xed after benchmarking about 5-6 competitors on a daily basis.
Right indenting & right discounting: Aided indent, system indent and system driven discounting.
FnV champion program: Dedicated & knowledgeable champs for handling FnV in shops.
Value pricing: Consistently our selling prices are cheaper than most competitors on key perception driving skus (Basket of 15-20 skus).
Quality assurance: Quality Checks at every stage to ensure only better than market quality and fresh material is delivered to every customer.
Safe fruits: All fruits sold by us are safely ripened in our ripening chambers.
Dependable & frugal supply chain: Same DC premises and same vehicles are used for FnV in the morning and FMCG in the afternoon/evening to keep deliveries costs frugal.
Rigorous dump & shrink monitoring: To control FnV supply chain losses to under 6.5 per cent. Consistent delivery of best net margin
The Trade Pundits
Category Leaders_The Trade Pundits_New.indd 52 4/12/2017 5:49:42 PM
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